Corporate governance team of the year (large cap)
EMC Corp
Taking home the title of corporate governance team of the year is no mean feat but, for the leaders at EMC Corp, it wasn’t that complicated. For them, success comes down to two things: integrity and communication.
It may sound simple but, in reality, setting up the right structure and environment to be recognized as the best in the business takes many years of preparation. ‘We believe in communicating with our constituents both internally and outside the company,’ explains Paul Dacier, executive vice president and general counsel at EMC. ‘In doing so we will have many conversations with many people from a range of backgrounds and professions, and with many different expectations, but we always believe we should communicate.’
Susan Permut, senior vice president and deputy general counsel, explains that ‘governance is a relationship field, and you need to establish good relationships over a long period of time in order to have things work well. While we were recognized as team of the year, a lot of what we have been able to do over the past 12 months is a direct result of building strong relationships over many years. We have been hard at work building relationships with all constituents, including large institutional shareholders, some activist shareholders, pension funds, proxy agents like RiskMetrics and corporate governance ratings groups like the Corporate Library. Everyone has a point of view, and we try to listen whenever we can.’
Both Dacier and Permut point to the efforts of the board of directors in achieving such a high level of success in the field. The company’s directors, as the judging panel pointed out in awarding them top honors, ‘are among the most open and accessible of any board in the country, and they actively and intelligently engage shareholders, activists, advisers and regulators.’ Dacier explains: ‘We always have our directors on calls or in meetings when talking to important constituents, be they friendly or not. This shows how seriously we take these issues and how engaged the board is.’
Best of the best
The company does not take the honor lightly, and perhaps the best indication of how successful it has been is the caliber of the companies it beat to the award: Intel, Monsanto – both winners themselves in other categories – General Mills and Pepsi were all short-listed to take home the team of the year gong.
‘We’re honored to be recognized as Corporate Secretary’s team of the year for corporate governance,’ says Joe Tucci, EMC’s chairman and CEO. ‘EMC and its board of directors have always prided themselves on actively engaging and openly communicating with shareholders and other constituents. Receiving this honor from this esteemed panel of judges validates not only EMC’s commitment to good governance, but also the quality and dedication of our legal team and board of directors.’
Dacier says companies looking to become best in class ‘have to sit down and really look at where the organization is – what are the strengths, weaknesses, opportunities and threats – and then figure out how to work on all these things in the future. If there are tough situations out there, they need to be dealt with and worked on. You have to sit down with people and deal with difficult situations, and often this needs to be done with the presence of board members.’
‘You sometimes have to see what a company’s fact pattern is and what challenges you have, and how you can turn those into an opportunity,’ adds Permut. ‘In our case we had some challenges with sustainability reporting. We were pushed by some shareholders on this topic so we sat down and dealt with the issues, and have done an excellent job in building an outstanding disclosure program that shareholders now compliment us on.’
One unique element of EMC’s governance program is its annual dinner, to which key customers and clients are invited. In attendance is the board of directors. ‘There is at least one director at each table,’ explains Dacier. ‘This allows for very active communication between customers and directors, and enables directors to have their finger on the pulse of the company outside of the presence of management. This really is a sign of a world-class platform.’
Taking control
‘We believe in outreach and engagement, and involve the chairman and various members of management and the board as appropriate,’ says Permut. ‘This is a very effective way to minimize problems on the shareholder front because better transparency and a closer relationship result in fewer proposals and complaints. This is one area we can control.
‘We like to be proactive and be a leader in terms of governance, and have adopted a lot of practices voluntarily before they became law or common practice. This does not mean we have a general policy of getting out in front, but we will always take a measured approach to these issues – if it is good for the company and for shareholders, we will do it.’
Dacier boils it all down to this: ‘We may not always agree with what they have to say and they may not always agree with us, but we do believe that there is a right way to deal with people, and that is by talking to them openly and honestly.’
